Wooly Apple Aphid
Q: The lower trunk of my apple tree is severely swollen and disfigured. Where the ground has eroded nearby, some of the roots are visible and they have knots and swelling on them.
What could this be?
A: It sounds like woolly apple aphid.
Unlike most aphids, which feed exclusively on plant leaves, this one feeds on apple tree bark and roots.
The best control is persistent application of horticultural oil sprays in spring when the young are present and a yearly drench of imidacloprid systemic insecticide as allowed by the label.